Pension schemes optimistic on economy despite Greek crisis
GLOBAL - Pension funds are increasingly optimistic about the strength of the global economy, despite concerns over the financial situation in Greece, according to a quarterly survey in association with IPE.
The latest Global Pension Surveys conducted by Tilburg University in the Netherlands showed almost 70% of respondents had a more positive outlook about their country's economy, up sharply from 53% in the first quarter.
The survey of 45 pension schemes took palce in late April, at a time when the Greek government bonds were being downgraded by credit agencies. As a result, over half of the respondents claimed they were more worried about the situation in Greece than they were about the possibility of a trade conflict between the United States and China.
Findings from the study also demonstrated a strong belief that pension funds would continue to be able to meet their funding levels. But despite the positive attitude, pension schemes expected investment return to be down during the next 12 months, predicting negative returns of 0.22%. Participants also predicted a slight decrease in cash allocation and a slower growth in overall pension assets of 4.5%, down from 5.1%.
Among the outside factors worrying pension funds was the stability of the financial system and market volatility, with changes to the interest rates cited as the chief concern.
The task of monitoring external managers sufficiently, as well as managing risk effectively were cited as some of the main internal concerns for the funds, while 53% were particularly concerned about maintaining a stable funding level.
Overall, responding pension funds presented a balanced portfolio, with 44% invested in fixed income, followed by equities with 26%. The remaining one-fifth consisted of a mixture of real estate, alternative, cash and other unspecified investments.
The current driving force for most respondents was guaranteeing a more intelligent asset allocation and shying away from a "herd mentality", with many also citing consistent returns as one of their goals over the course of the next year.